Newburg Staff Writers-March 31, 2021
The American Rescue Plan Act of 2021 (ARPA) is the $1.9 trillion bill passed last month to assist taxpayers who have been impacted negatively by the COVID-19 Pandemic. The Act gave birth to or enhanced/extended various programs enacted to assist those in need. Below we have compiled the latest changes for many of these programs.
Personal Income Tax Filing Deadline Extension
The IRS has extended the filing deadline for individuals to file their federal income tax returns and pay any 2020 balance due. The due date has been extended one month to May 17, 2021. Massachusetts has also extended the state filing deadline to match the federal’s May 17 date. Not all states have followed suit, so be sure to check with your state government for the latest information. It should also be noted that the IRS and many states have not changed the first quarter 2021 estimate due date as it still remains April 15, 2021.
Economic Income Payment (EIP)
The recent 2021 Pandemic Relief Bill creates a new round of EIP payments afforded to qualifying individuals and similar to the 2020 advance payments will be sent and administered by the IRS. Similar to last year, you can check the status of your payment at: https://www.irs.gov/coronavirus/get-my-payment.
The Act provides individuals with a $1,400 recovery rebate credit ($2,800 for married taxpayers filing jointly) plus $1,400 for each dependent for 2021, including college students and qualifying relatives who are claimed as dependents. For single taxpayers, the credit and corresponding payment will begin to phase out at an adjusted gross income (AGI) of $75,000, and the credit will be completely phased out for single taxpayers with an AGI over $80,000. For married taxpayers who file jointly, the phase-out will begin at an AGI of $150,000 and be completely phased-out once the AGI reaches $160,000. For head of household taxpayers, the phase-out will begin at an AGI of $112,500 and completely phase-out when the AGI reaches $120,000.
IRA/HSA Funding Extension
The IRS extended the IRA and HSA contribution deadline until March 29, 2021. In 2020, Roth and traditional IRA contributions were capped at $6,000 per year, or $7,000 for those age 50 or older. HSAs max at $3,600 per year for individuals and $7,200 per families in 2020 with an additional catch-up contribution of $1,000 for those age 55 or older.
Pandemic Emergency Unemployment Compensation (PEUC)
The PEUC, through the Consolidated Appropriations Act, extended the program, which was set to expire on March 14, 2021. Now the ARPA provides up to 79 weeks of unemployment benefits (and up to 86 weeks for individuals in states with high levels of unemployment) and is extended through September 6, 2021.
Economic Injury Disaster Loan (EIDL)
Beginning the week of April 6, 2021, the loan limit for COVID-19 EIDL loans will go from six months of economic injury, with a maximum loan amount of $150,000, to up to 24 months of economic injury with a maximum loan amount of $500,000. Any COVID-19 loans in process when the new limits take effect will be considered for the new maximum limits. The loans have a 30-year maturity with interest rates of 3.75% for small businesses, including sole proprietors and independent contractors, and 2.75% for not-for-profits.
Employee Retention Tax Credit (ERTC)
The ERC, introduced under the CARES Act and later updated/expanded under the Consolidated Appropriations Act has been even further expanded under the ARPA to include (1) recovery start-up business (employers who began business after February 15, 2020, have gross annual receipts up to $1 million and are otherwise ineligible under the eligibility test and (2) severely distressed employers (companies with gross receipt reductions of more than 90% as compared to the same quarter in 2019). Under the CARES Act, businesses could take advantage of either the PPP or the ERTC, but not both. The Relief Act and ARPA retroactively eliminate this limitation and the tax credit has now been expanded two additional quarters, through the end of 2021.
Paycheck Protection Program (PPP)
The US Senate passed legislation providing a 60-day extension for applications for the PPP. Employers now have until May 31, 2021 to submit their applications. The act also gives the Small Business Administration (SBA) more time to process loan applications, an additional 30 days, through June 30, 2021.
Restaurant Revitalization Fund Grants (RRF)
The fund, part of the recently passed American Rescue Plan Act, will provide $28.6 billion in grants to restaurants and bars in need. Restaurants, Bars and other food related businesses, adversely impacted by COVID-19 will have the opportunity to apply for grants, which will be based on lost revenue. Please see our Restaurant Revitalization Fund – Q&A Article for more detail. You can also see our Restaurant Revitalization Fund (RRF) Flyer for details.
We will continue to provide updates as any programs change. Please continue to check out our COVID-19 Resources Page on our website for the latest articles, information and resources.